Correction alone not enough, stocks must reach right value: Sanjeev Prasad

Market corrections alone do not create investment opportunities- what matters is whether stocks have corrected to their fair value, says Sanjeev Prasad of Kotak Institutional Equities. He pointed out that despite sharp price declines, many stocks, particularly in the consumer staples sector and speculative "narrative stocks," remain overvalued. Meanwhile, he identified select banking stocks as one of the few areas where investors can still find value.

«Just because the stock has corrected does not mean anything in isolation. Has it corrected to the right level in terms of value? That is the question to ask,» he asserted.

In an interaction with ETNow, he cautioned against assuming that every decline presents a buying opportunity and urged investors to focus on true valuation rather than price movements alone.

Here is what he said:

«The market seems to be more focused on prices rather than looking at the price-value proposition across stocks,» Prasad said. He noted that consumer staple stocks, despite declining growth rates, continue to trade at 45-60 times forward price-to-earnings (PE) multiples.

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